German shares posted modest gains in post bourse electronic trading following Monday's public holiday. Hoechst was down 2.05 deutschmarks at DM86.95 after rising last week on rumours that Roche and Bayer are going to buy it.

Paris CAC-40: 4086.98 (+45.82)

French shares finished higher yesterday, bolstered by strength in the dollar and bond markets and a big rise in the index heavyweight France Telecom.

Speculative interest in pharmaceutical and paper stocks after news of mergers in those industries also contributed to the rise in share prices.

Traders said the French market still looked like a bargain in Europe, particularly in comparison with the German market.

Milan Mibtel: 23,832 (+276) Italian shares closed stronger, but below the day's highs, as institutional investors scooped up banking and insurance stocks, dealers said.